China and India: Asia’s most powerful economies – Part 2

China, these days, is facing hard times due to the lack of foreign demand, especially in the US and Europe, economic crisis being one of the reasons. The country’s own domestic consumption is less than satisfactory which has resulted in slow growth rate, somewhere near 2 percent a year, which was once well above 10 percent per year.

However, still China has the best production infrastructure in the world, outdoing that of Europe and the US. The country thrives on economies of scale and quality that even the US cannot match. Apple CEO Tim Cook recently narrated the comparison between manufacturing quality in China and the US. No longer is Made In USA considered satisfactory, was the crux of his quote to the media.

India has been attracting manufacturing no doubt but the rate of production in the country is still lower than China. However, the stock trading and mutual funds trading is at its fullest. Many of the investment banks have started investing in Indian stock markets. The likes of Goldman Sachs and Dreyfus have set-up their establishments in India, and are outdoing the performance of their sister branches in Europe. Dreyfus India, for instance, has returned 10 percent, and above, on investments in last half a decade.

The main question that is on everybody’s lips is will India become the second China to endure depression as the international markets go to slums.

First of all, comparing the Indian economy to China is sheer short-sightedness. Secondly, China is export-oriented country with no or little domestic consumption. Thirdly, the Chinese government intrudes in the operations of privately owned businesses.

India is a different economic breed altogether. It is oe of the most densely populated country in the world and has capitalized on it. The country has not and never will dwell on exports solely. More than 30 percent of the population lives in urban areas and even more are migrating to cities for better opportunities. More than half of the population is youth, under the age of 25.

Therefore, India will never repeat the history of its neighbour. There are more and more companies flocking to India and the domestic organizations are acquiring businesses from Europe; Land Rover (Range Rover) and Jaguar belong to Tata Motors of India.

How is that for a reference?

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Posted by Usman Khalid on Jun 8 2012. Filed under Business, South Asia. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.